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Bouncing Back: Restoring solvency after bankruptcy

If you’ve been through the painful experience of bankruptcy, you may have felt like your financial world was falling apart. Please note, however, that it is possible to rebuild your credit after this ordeal — and you can start immediately.

Here are some effective tips to achieve this.

Set a budget and stick to it

As with many financial goals, creating a realistic budget that takes into account your income and expenses is a key step in getting back to healthy credit. Be aware of your spending habits and cut back on any unnecessary expenses so that you have enough money to pay your bills and meet your obligations on time.

Pay your bills on time

Always paying your bills on time is essential to rebuilding your credit after bankruptcy. In fact, late payments can cause your credit score to drop significantly. Set up automatic direct debit or reminders so you never miss a deadline. Over time, your regular payments will demonstrate your financial responsibility and strengthen your credit rating.

Find a credit card that fits your situation

There are several credit card options that can help you rebuild your credit:

  • Secured credit cards require a cash deposit as collateral. This deposit is usually equal to the credit limit.

  • You can add a co-signer (a trusted friend or family member) to your credit card. The co-signer then risks damaging his credit rating, which can damage your relationship.

  • You can become an authorized user of someone else’s credit card account. As long as authorized users are reported to the credit bureaus, this can be a way to slowly rebuild your credit.

Apply for a credit check loan

Credit building loans are intended for people who need help in this regard. Not only can they be useful for students or newcomers who have little or no credit history, but they can also help rebuild credit after bankruptcy. With this type of loan, you borrow a small amount from the lender and make regular monthly payments for a set period of time. The lender reports your payments to the credit reporting agencies, which has a positive impact on your report. Once the loan is paid off, your credit history will be solidified.

Monitor your credit report

It is important to check your credit report regularly, especially during the collection process. Get a free copy of your credit report from the two major credit reporting agencies (Equifax and TransUnion) and check for errors. If you find any, report them to the appropriate agency for correction.

Did you know ? As an RBC Online Banking customer, you have FREE access to TransUnion’s CreditView dashboard, which allows you to view your most recent credit score and see how different types of loans may have affected it over the years.

While it won’t happen overnight, smart financial management will put you on the road to rebuilding your credit after bankruptcy. Stick to your financial goals and before you know it, a more stable and brighter financial future will appear before you.

This article is intended to provide general information only and is not intended to provide legal, financial or other professional advice. Please consult with a professional advisor regarding your specific situation. The information presented is believed to be factual and current, but we do not guarantee its accuracy and cannot be considered an exhaustive analysis of the topics discussed. Opinions expressed reflect the judgment of the authors as of the date of publication and are subject to change. Royal Bank of Canada and its entities do not promote, either explicitly or implicitly, the advice, opinions, information, products or services of third parties.

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